This study aims to explore the impact of output and wage on labour demand in Saudi Arabia at sectoral level. We applied cointegration and equilibrium correction methods to the time-series data of 10 sectors over 1995-2016 using the demand side framework and considering the structural breaks in the data. We found that in the long run, the employment is positively affected by the output while the impact of the wage was negative in all sectors. In the short-run, employment growth in all sectors reacted to the wage growth except for the government sector. While only some sectors responded to the output growth, we also found that employment can adjust to the desired equilibrium level in all sectors but time horizon for the adjustment processes varies across the sectors. Differences in estimated coefficients imply that policies should be sectorspecific as a 'one-fits-all' policy would fail to consider the sectoral specificities.
This research paper explores the causal relationship between household consumption and economic growth over the period of 1980-2017. Hence, it applies the popular cointegration tests alongside the most common causality test. The empirical analysis shows the presence of a positive long run relationship between household consumption and economic growth. In specific, we find evidence revealing that a one percent increase in household expenditures on consumption would boost economic growth by 0.7 percent. Furthermore, causality analysis, based on Granger (1969) test, suggests that variation in household consumptions could explain changes in economic growth.
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